Hiring report suggests economy has lost some punch — 113,000 jobs created

Hiring report suggests economy has lost some punch — 113,000 jobs created

Crystal Lister stands in line during a job fair for Rehab at the Hard Rock Hotel & Casino on Monday, Jan. 27, 2014. She is applying for a cocktail position. (Jeff Scheid/Las Vegas Review-Journal)

By CHRISTOPHER S. RUGABERTHE ASSOCIATED PRESS

WASHINGTON — For a second straight month, weak U.S. job growth has raised concern that the economy has lost the vigor it showed late last year.

A tepid gain of 113,000 jobs in January followed December’s puny increase of 75,000 — far below last year’s average monthly gain of 194,000.

Yet the jobs report the government issued Friday offered cause for optimism. Solid hiring last month in areas such as manufacturing and construction point to underlying strength.

And in a healthy sign, more people began looking for jobs in January. A sizable 115,000 formerly unemployed people also said they found jobs. Their hiring reduced the unemployment rate to 6.6 percent, the lowest in more than five years. Nevada statistics will be released later this month.

Most economists say they think hiring will strengthen during 2014 as the economy improves further.

Job growth “clearly has downshifted over the past two months,” said Doug Handler, chief U.S. economist at IHS Global Insight. “But we still believe the economic fundamentals remain strong and … forecast an acceleration of growth later in the year.”

Janet Yellen will be pressed about the job market and the economy when she testifies to Congress next week in her first public comments since becoming Federal Reserve chair on Feb. 1. Fed officials are scaling back their stimulus for the economy. They also have said they would consider raising their benchmark short-term interest rate at some point after the rate falls below 6.5 percent.

But the Fed hasn’t been clear about the timing. With the unemployment rate now close to that threshold, economists think the Fed might update its guidance after its next meeting in March.

Friday’s data suggest that the economy might slow in the first few months of the year from its robust 3.7 percent annual pace in the second half of 2013. The hiring figures follow other signs of a possibly softening economy. A survey of manufacturing companies showed that factory expansion slowed last month. A measure of forthcoming home sales fell.

The jobs report offered some hints that hiring could return to last year’s healthier levels in coming months.

To start with, the unemployment rate is at its lowest point since October 2008, just as the financial crisis was erupting. The rate fell because many of the unemployed found work. And the influx of people seeking jobs — a sign of optimism — was an improvement from December. In that month, the unemployment rate fell only because about 350,000 people stopped looking for work and were no longer counted as unemployed.

Another positive sign: Manufacturers, construction firms and mines added a combined 76,000 jobs last month — the most since January 2006. Goods-producing employers tend to hire only when they’re confident in the economy.

“You rarely see expansions in these industries without the economy being in fairly healthy shape,” said Gary Burtless, a Brookings Institution economist.

Home sales and construction are rising, a trend economists expect to continue. If it does, more construction jobs should lead to more retail spending.

The effect of government tax increases and spending cuts, which dragged on growth last year, should diminish in 2014. And despite recent turmoil in several emerging economies, the global economy appears in better shape than it has been in the past three years, when Europe’s financial crisis threatened U.S. growth.

“There’s nothing really holding growth back,” said Paul Ashworth, an economist at Capital Economics. Most economists expect the U.S. economy to expand 2.5 percent to 3 percent this year, up from 1.9 percent in 2013.

Several industries shed jobs last month, but the losses probably were temporary. Retailers cut nearly 13,000 jobs, but that followed three months of big gains.

And government jobs dropped by 29,000. Local governments shed 11,000 jobs, partly because bus drivers and cafeteria workers were temporarily laid off when winter weather closed schools. The federal government cut 12,000, including 8,500 at the U.S. Postal Service.

Economists don’t expect such deep cuts to continue. State and local tax revenues have recovered after plunging during the Great Recession.

Cold weather probably held back hiring in December, but the impact seemed to fade in January. That’s likely because the government’s survey of business hiring was conducted in mid-January, in between some of the worst winter storms.

Construction companies added 48,000 jobs in January, rebounding from a steep loss of 22,000 in December that probably reflected unseasonably cold weather.

But other firms unaffected by the weather are adding jobs. One such company is Agri-Industrial Plastics, based in Fairfield, Iowa, which makes fuel tanks and other parts for tractors, snowmobiles and ATVs. It sell to companies such as John Deere, Yamaha and Arctic Cat.

CEO Lori Schaefer-Weaton said she foresees healthy sales growth in 2014. The recovery in home sales and construction has created more landscaping work and boosted sales of riding lawnmowers and other equipment. Most of the company’s manufacturing customers are optimistic about sales this year.

She’s looking to add 12 new jobs to her 170-person staff. The company is seeking salespeople, customer service workers and quality control engineers.

“So far, what we’re seeing is looking good,” she said. “Hiring good people is at the top of my to-do list, every day.”

Comment section guidelines

The below comment section contains thoughts and opinions from users that in no way represent the views of the Las Vegas Review-Journal or GateHouse Media. This public platform is intended to provide a forum for users of reviewjournal.com to share ideas, express thoughtful opinions and carry the conversation beyond the article. Users must follow the guidelines under our Commenting Policy and are encouraged to use the moderation tools to help maintain civility and keep discussions on topic.